VIII - ESM Treaty

The European Stability Mechanism (ESM) Treaty was signed on July 11 2011. It was later renegotiated and a new ESM Treaty was signed on February 2, 2012. The Treaty provides a permanent emergency fund that is intended to succeed the temporary emergency funds. It entered into force on September 27, 2012 for 16 contracting parties (Estonia completed ratification on October 3). The 17 contracting parties are the member states of the Eurozone, but the ESM Treaty is concluded outside EU law.          
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What political/legal difficulties
did Austria encounter in the negotiation of the ESM Treaty, in particular in relation to the implications of the treaty for (budgetary) sovereignty, constitutional law, socio-economic fundamental rights, and the budgetary process.

Overall, the main position of the SPÖ-ÖVP government under SPÖ-Chancellor Faymann (see also question V.1 and question I.1) was similar to that of the German government, namely that there is no alternative to a permanent stabilization mechanism, that a stable EMU is essential for the Austrian (strongly export-oriented) economy and that default of a member state of the currency union was too risky and therefore not an option. The at that time Minister of Finance (Maria Fekter, ÖVP) said in parliament that whoever votes against the ESM is voting in favor of speculators. She further made clear that the fiscal pact would be there to tackle debt issues and that the Austrian parliament would get the strongest participation rights in the ESM’s decision making procedure of all member states. The ESM would show how to handle crises and would avoid burying heads in the sand at moments of crisis. She admitted that it is not the perfect solution but the only viable solution at present.[1] A member of the SPÖ acknowledges that budgetary sovereignty might by partially at stake, but that all the commitments made have limits, which is why budgetary sovereignty is not lost. From the opposition parties, the Greens were siding with the government whereas the far-right parties FPÖ and BZÖ were strongly opposing it with arguments such as that Austrian taxpayer money was being wasted to bailout banks and speculators and that Austria had not signed up for a ‘transfer-union’. The leader of the FPÖ even said in parliament that the fact that SPÖ, ÖVP and Greens agreed on the ESM amounted to a ‘coup d’État’. The BZÖ tried to initiate a referendum about the ESM but failed to reach the necessary majorities. However, the question of why a referendum on the TESM was not held was also debated in parliament.[2]

Several debates took place in the National Council and its committees prior to the signature of the first treaty, in May and June 2011, and then in June and July 2012, prior to the ratification of the final version. The Constitutional Committee and the Budgetary Committee were both charged to write reports on the proposed legislation that included the treaty and several accompanying laws, including a constitutional amendment that would ensure the National Council’s participation in the ESM’s decision-making process. Both committees recommended adopting the treaty and the accompanying legislation. The Constitutional Committee only requested that given the extensive participation rights in the ESM’s decision-making given to the parliament through the constitutional amendment, the government would have to come up with a legislative proposition that would tackle the possible problem of insider-trading that would result from the ESM’s secondary market operations being discussed in parliament.[3]

A public expert hearing was held upon recommendation of the Constitutional Committee at the plenary meeting of the National Council on June 28, 2012[4] consisting mostly of university professors and professionals from the (central) banking sector. Despite the fact that several experts were skeptical about the ESM’s actual capacity to tackle the problems of the monetary union, none of the experts claimed that the ESM Treaty could be unconstitutional. Several of them actually pointed out once again that a small country like Austria with an open market economy and strong export-orientation needs a European solution to the crisis and cannot survive alone in a globalized world. [5] The Greens were maybe slightly more skeptical about the ESM than the governing parties, but in the end they agreed to it mainly because of the strong position the parliament got in the decision-making process of the ESM through the constitutional amendment.

After the Constitutional Committee’s final reports on the TESM[6] and on the accompanying laws (in particular the constitutional amendment that should ensure parliamentary participation in the ESM’s decision making, see question VIII.6)[7] on July 2, 2012, and after the Budget Committees report on the necessary amendments of budgetary laws[8], all issued on July 2, 2012, the TESM and the accompanying laws were approved on July 4, 2012 in the plenary meeting of the National Council after a fierce debate in which none of the parties, especially not the FPÖ and the BZÖ, changed their original positions.[9] The Federal Council gave its approval on July 6, 2012.

How has the ESM Treaty been ratified in Austria and on what legal basis/argumentation?

For the overall treaty ratification process, please see question V.2.

As mentioned in question VIII.1, the TESM was first discussed by the Constitutional Committee of the National Council and then approved by the National Council by a majority of 126 against 53 votes on July 4, 2012. The Federal Council gave its approval on July 6, 2012 by a majority vote of 45 against 10.[10] Although it was considered as law amending and law-completing, it was not considered to amend the treaty foundations of the European Union and it was not considered to interfere with the constitution.  However, several laws necessary for its implementation accompanied the treaty. [11] In particular, several paragraphs were added to the constitution (Art. 50a -50d B-VG) in order to ensure the role of the Austrian parliament in the ESM decision-making processes. This will be elaborated in detail under question VIII.6. Here, it is just important to note that the approval of the treaty was based on Art. 50 (1) 1 B-VG and did not therefore not need higher majorities, whereas the approval of the constitutional amendment accompanying the treaty did (124 against 51 votes).

The Federal President signed the treaty on July 17, 2012 and therewith ratified it.[12] An important difference in comparison to Germany is the weight of the Federal President’s signature in the ratification process. One can argue that the German president’s constitutional review competences go further than those of the Austrian president, the extent of the president’s review competence is disputed in Germany and sometimes even in Austria. The important difference is, however, that whereas the German president can withhold his signature and ask the constitutional court to review the constitutionality of the statute/treaty in question first, an application to verify the constitutionality of a statute/treaty can only be brought in front of the court once the president has signed it. Therefore, the case at the Austrian Constitutional Court was brought only after ratification, on October 22, 2012 (for details see question VIII.4).

The treaty was counter-signed by the Federal Chancellor and deposited at the European Council on July 30, 2012.[13] It was then been further published in the Federal Law Gazette on September 28, 2012 which states that it had gotten into force on September 27, 2012 (according to Art. 48 TESM).[14]

Ratification difficulties       
What political/legal difficulties
did Austria encounter during the ratification of the ESM Treaty?

The relevant publication in the Federal Law Gazette [15] further contains the Declaration of September 27, 2012 on the interpretation of the TESM signed by representatives of the treaty parties in Brussels.[16] The declaration was made in reaction to the German Constitutional Court’s BVerfG, 2 BvR 1390/12 of September 12, 2012[17]. The German Constitutional Court had raised concerns that in several constellations, the upper limit of each member states’ financial commitment could be exceeded without each member state’s consent and further, that professional secrecy and immunity provisions would hinder members of the ESM’s board of governors to properly inform their parliaments. The declaration therefore specifies that the relevant provisions of the TESM should be interpreted in a way that the upper limit can in no case be exceeded without each member state’s representatives’ consent and that the TESM does not hinder the information of national parliaments.

The legal status of this declaration has been, however, subject to controversy in Austria. The Austrian Constitutional Court specified in its decision (see question VIII.4) that the declaration does not amount to a ‘reservation’, but that it is an interpretative explanation. It is because of this reason that the Federal President did not consider it necessary to ratify it and that it was not necessary to submit it for approval at the National Council. Given the uncertain legal status of the declaration, a major question raised in the parliament even after the Austrian Constitutional Court’s decision from March 16, 2013, was why Austria had not made – like Germany – a proper reservation under public international law.

Case law        
Is there a (constitutional) court judgment on the ESM Treaty?

The Austrian Constitutional Court (Österreichischer Verfassungsgerichtshof) rendered its judgement on the ESM on March 16, 2013. It rejected all applicant’s arguments invoking (in eventu partial) unconstitutionality and/or illegality of the TESM and the Declaration from September 27, 2012. A detailed analysis of the case can be found in Annex I.1.   

Capital payment
What is the role of Parliament in the payment of the (first instalment of) paid-in capital required by the ESM Treaty (article 36 ESM Treaty)? What relevant debates have arisen in relation to this payment?

According to the general budgetary process (see question II.1 and II.2), for the first instalment (and any other instalment) the Federal Financial Law (BundesfinanzG) 2012, the Federal Financial Framework Laws (BundesfinanzrahmenG) 2012-2015 and 2013-2016 and the Federal Budget Law needed to be amended. The budgetary committee of the National Council recommended the adoption of the amendments including the modifications from the original government proposition that were suggested on the same day of the discussion. The meeting of the budgetary committee took place directly following the meeting of the constitutional committee regarding (regarding the approval of the TESM and the accompanying laws) on July 2, 2012 (see question VIII.1). No specific discussion about the first instalment takes place. The debate continues to be general about the ESM.[18] However, in the general TESM-discussions in the National Council referred to in question VIII.1 and VIII.2, several speakers repeat how the capital need to be paid in. Austria’s share in the ESM’s paid-in capital is 2.78%, the amount to be paid-in is EUR 2.23 billion, to be paid in five tranches of à 20% between 2012 and 2014. Austria paid the first tranche of 890,688 million on October 12, 2012.[19] Art. 41 TESM on how the capital needs to be paid and that the first instalment needs to be paid at the latest 15 days after the entry into force of the treaty is not mentioned as specific problem anywhere.

Application & Parliament    
What is the role of Parliament in the application of the ESM Treaty, for example with regard to decisions to grant financial assistance and the disbursement of tranches, which both require unanimous adoption by the Board of Governors composed of the national Finance Ministers?

As mentioned in questions VIII.1 and VIII.2, the approval of the TESM came with a constitutional amendment that is aimed at establishing a role for the parliament in the decision-making process of the TESM. Basically, four new articles were added to the constitution.[20]The (partial) translation of the articles is the following:

Art. 50a B-VG: The National Council contributes to the subject matters of the European Stability Mechanism.

Art. 50b B-VG: The Austrian representative in the European Stability Mechanism may only agree to or abstain from

1.      a proposal for a decision to principally grant a Member State stability aid,

2.      a modification of the authorized paid-in capital and an adaption of the maximum lending capacity of the European Stability Mechanism, as well as calls of authorized but not paid-in capital and

3.      a modification of the lending instruments,

if the National Council has enabled him to do so on the basis of a proposal of the Federal Government. In cases of special urgency, the responsible Federal Minister brings this proposal in front of the National Council. Without enablement of the National Council the Austrian member has to refuse the proposal of such a decision.

Art. 50c B-VG:

§  The responsible Federal Minister has to immediately inform the National Council about the subject matters of the European Stability Mechanism according to the provisions of the federal parliamentary law. In the federal parliamentary law, rights for the National Council to make statements shall be foreseen.

§  When the National Council has made a statement on subject matters of the European Stability Mechanism in time, the Austrian representative has to take it into account in negotiations and in votings. The responsible Minister has to report to the National Council immediately about a voting and has to eventually give the reasons why it did not take the National Council’s opinion into account.

§  The responsible Minister reports regularly to the National Council about the measures taken in the framework of the European Stability Mechanism.

Art. 50d B-VG:

The details about Art. 50 (b) and 50 (c) par. (2) and (3) are determined by the federal parliamentary law [see the answers to questions VIII.1 and VIII.2].[21]

The amendment of the federal parliamentary law (Geschäftsordnungsgesetz des Nationalrats GOGNR) leads to the introduction of two permanent subcommittees to the budget committee (§ 32f GOGNR). The first subcommittee is charged with the cooperation in secondary market operations of the ESM and the second subcommittee is charged with all other subject matters of the ESM and all the pre-consultations of propositions based on § 74d (1) GOGNR (which specifies the National Council’s powers according to Art. 50b B-VG). In each subcommittees, at least one member of the parties represented in the main committee has to be present. Documentation of the activities of the second[22] subcommittee and its reports are available online.

Nota bene that the creation of sub-committees of the budget committee was precisely the issue at stake in the German Constitutional Court Decision BVerfG, 2BvE 8/11 from February 28, 2012 regarding an injunction. The German Constitutional Court had argued then that the delegation of the then-EFSF-related decisions for the sake of efficiency violated the principle of democracy which is why EFSF-related decisions had to be made by the parliament.

Application difficulties 

What political/legal difficulties
did Austria encounter in the application of the ESM Treaty?

 For the procedure, see question VIII.6.

·         Neither the TESM treaty, nor the accompanying laws (amendment of the constitution and amendment of the Payment Balance Stabilization Law) nor the amendment of the Federal Parliamentary Law were yet in force when the measures for Spain were decided. The accompanying laws and the amendment of the Federal Parliamentary Law came into force on July 26, 2012, however, while the package for Spain was decided on July 20, 2012.[23]

Cyprus: The subcommittee recommended[24] that the National Council enabled the Austrian representative at the ESM according to Art. 50b Z 1 B-VG in connection with § 74d Abs. 1 Z 1 GOG-NR to approve the Cyprus-measures[25]. The interesting thing is that the Greens, that had always voted for ESM-related measures, voted against. Still, since only a simple majority is required, the SPÖ/ÖVP majority was sufficient.

Have there been any relevant changes in national legislation in order to implement or to comply with requirements set by the ESM-Treaty?

See question VIII.1, VIII.2 and VIII.5.

What other information is relevant with regard to Austria and the ESM Treaty?

No other relevant information.

[1]              Stenographic Protocol No. 164 (cit. supra note 32), Finance Minister Fekter’s statements on pp. 117-119.

[2]              Idem, p. 107.

[3]              Entschließung” (=Decision) of the Constitutional Committee in addition to its Final Report No. 1878 (see below note 51) from July 2, 2012, at

[4]              Summary of the Expert Hearing in the plenary meeting of the National Council from June 28, 2012 in Press Release at

[5]              Idem.

[6]              Final Report of the Constitutional Committee No. 1880 on the government’s proposition no. 1731 (TESM) from July 2, 2012 available at:;

[7]              accompanying explanations of the proposition are available at

                        [7] Final Reports of the Constitutional Committee No. 1878 on several deputies’ propositions no. 1985/A regarding the constitutional amendment and the amendment of the payment balance stabilization statute from July 2, 2012, at and No. 1879 regarding on several deputies’ proposition no. 1986/A regarding the amendment of the federal parliamentary law from July 2, 2012, at d

[8]              See question VIII.6 for detail.

[9]              Stenographic Protocol No. 164 (see section V, footnote 1)

[10]             Stenographic Protocol No. 164 (see section V, footnote 1) pp. 161-162.

[11]             Constitutional Amendment and Payment Balance Stabilization Law amendment 2012 (known as “ESM-Begleitnovelle“, BGBl I 65/2012, at; amendment of the federal parliamentary law known as “Änderung des Geschäftsordnungsgesetzes 1975, BGBl I No. 66/2012, at:

[12]             Federal President’s Office communication from July 17, 2012, at:

[13] Indeed, all legislative acts are to be signed by the President and counter-signed by the Chancellor as a formal requirement for a law being enacted.

[14]             ESM Treaty and Declaration from September 27, 2012 as published in BGBl III 138/2012, at:

[15]             See note above.

[16]             Declaration from September 27, 2012 (original version), at

[17]             Bundesversfassungsgericht BVerfG, 2 BvR 1390/12 vom 12.9.2012, at; a detailed summary is available here:

[18]             Press Release about the discussion in the Budget Committee of the National Council from July 2, 2012 at, Report of the Budget Committee at

[19]             Press release of the Finance Minister’s report on the Euro Stabilization Measures in the 4th quarter of  2012, at

[20]             Bundes-Verfassungsgesetz (Federal Constitutional Statute = the constitution), available in its current version at:; available in English (the English version is from 2010 and does not contain the latest amendments yet). The added articles are available in German at:

[21]             Amendment of Federal Parliamentary Law (Gesetz über die Geschäftsordnung des Nationalrats), BGBl I 66/2012, at

[22]             List of reports of the subcommittee in overall ESM Matters at

[23]             European Commission, Summary on Stabilization Measures for Spain, at

[24]             Report of the Pemanent Subcommittee in ESM subject matters from April 16, 2013, at

[25]             Discussion, vote and enablement of the Austrian Representative during the Plenary Session of the National Council from April 22, 2013, on pp. 22-89 in Stenographic Protocol of the National Council’s session no. 198, XXIV Legislative Period, at